DESCRIPTION: (Applicant's abstract): This is a competing renewal application for a research program that has focused on the development of innovative pharmacological and psychosocial treatment strategies for managing individuals with schizophrenia who are living in the community. The current proposal will extend the investigator's previous work into the arena of vocational activity and rehabilitation. The investigator's experience to date in enhancing psychosocial outcomes with social skills training led him to hypothesize that he can combine skills training with supported employment to improve social adjustment and quality of life. The investigator is also hypothesizing that skills training can improve the relatively poor job tenure of individuals with schizophrenia and schizoaffective disorder who participate in supported employment. The investigator will also study the long-term effectiveness and side effects of two new antipsychotic medications, olanzapine and risperidone, in patients participating in this program. Neurocognitive deficits in schizophrenia appear to be important factors that can interfere with functional outcome in schizophrenia. With this in mind, the investigator will study the relationship between a number of cognitive measures and social and vocational outcome. One hundred-sixty patients with schizophrenia or schizoaffective disorder who are living in the community will be randomly assigned to olanzapine or risperidone. After these patients have been stabilized in their drug condition they will participate in a program of Individual Placement and Support (IPS) as developed by Robert Drake who is the co-principal investigator on this grant. After patients are placed in a job they will be randomly assigned to continued IPS with or without Psychoeducational Skills Training (ST). The ST will consist of six months of skills training using both the Workplace Fundamentals Module and additional clinic and community-based skills training. The investigator will evaluate outcome during the next two years with measures of clinical psychopathology, medication side effects, functional outcomes, and quality of life.